Quality Management

Lecturer: Duong Vo Nhi Anh

Department of ISE, HCMIU
dvnanh@hcmiu.edu.vn
• Study groups
• Textbook:
Howard S. Gitlow et. al., Quality
management, 3rd edition, McGraw Hill,
2005
 Assessment
• Homework 10%
• Quiz, class participation 10%
• Group project 20%
• Mid-term exam (open book) 20%
• Final exam (open book) 40%
 Course description
• Chapter 1 Fundamentals of Quality
• Chapter 2 Introduction to TQM
• Chapter 3 Three pillars of TQM
• Chapter 4 Behavioral Component of TQM
• Chapter 5 Management Components of TQM
• Chapter 6 Technical Components of TQM
(ISO, control charts)
• Chapter 7 Other tools: SOP and QFD.
 Chapter 1
Fundamentals of
Quality

5
 Learning objectives
To understand:
• Basics of process
• Concept of quality
• Relationship between quality and cost
• Relationship between quality and productivity
• Benefits of improving quality
 Learning objectives
To understand:
• Basics of process
- Definition
- Variations
- Feedback loop
• Concept of quality
• Relationship between quality and cost
• Relationship between quality and productivity
• Benefits of improving quality
Process?
 Process definition
Customer feedback

Inputs
• Human resources
The Outputs
• Facilities & processes transformation • Goods
• Technologies process • Services
• Materials

Performance information

A process is a collection of interacting components

that transform inputs into outputs toward a common
aim called a mission statement
 Variations in process
Example: Intel Corporation and its
“copy-exactly” strategy

Regardless of wherever the chips are made,

they are made in exactly the same way.
- Equipment
- Materials
- Standard operating procedure
..

Why such attention to exactness of detail?

Variation in the production process leads to quality defects
and lack of product consistency.
 Variations in a process
The outputs from all processes and their components
parts vary over time.
Number of

Actual Values
Accidents

Ideal Value
Time

Example
 Variations in process
Special cause variation Common-cause variation
-Due to event external to the -Due to the process itself
usual functioning of system
-Cause can be identified & -To be reduced to improve the
eliminated process
-Determine process capability

Example
 Causes of variations

Special Common

Hiring, training and supervisory practices X

Working conditions X
Management style X
Policies and procedures X
Design of products or services X
Operator failure X
Software failure X
Machine malfunction X
Computer crashes X
Power surge X
Abnormal web traffic X
 Feedback loop
Input Process Output

Feedback Loop

A feedback loop relates information about outputs

•from
No feedback loopback to other stage(s) to make an
any stage(s)
•analysis
Special of
cause only feedback loop
the process
• Special and common cause feedback loop
 Example of feedback loop control
• Paul is a 40-year-old, mid-level manager who is unhappy because he
wants his boss to give him a promotion. He thinks about his
relationship with his boss and wonders what went wrong.
• He determines that over a period of 10 years, he has had about 40
disagreements with his boss (one per quarter).Paul thinks about what
caused each disagreement. Initially, he thought each disagreement
had its own special cause.
• After studying the pattern of the number of disagreements per year, Paul
discovered that it was a stable and predictable process of common
causes of variation. Subsequently, he wrote down the reason for as
many of the disagreements as he could remember (about 30). However,
after thinking about his relationship with his boss from the perspective of
common causes, he realized his disagreements with his boss were not
unique events (special causes); rather, they were a repetitive process,
and the reasons for the disagreements could be classified into common
cause categories.
• He was surprised to see that the 30 reasons collapse down to four
basic reasons poor communication of a work issue, a process failure
causing work not to be completed on schedule, unexcused absence,
and pay-related issues. With one reason, poor communication of a
work issue, accounting for 75% of all disagreements.
• Armed with this insight, he scheduled a discussion with his boss to find
a solution to their communication problems. His boss explained that he
hates the e-mails that Paul is always sending him and wished Paul
would just talk to him and say what is on his mind.
• They resolved their problem; their relationship was greatly improved,
and, eventually, Paul received his promotion.
 Questions
• What could happen if Paul didn’t examine the
problem and continue his work even though he was
not happy?

• What could happen if Paul treated all the 40

disagreements with his boss as 40 special causes?
 Learning objectives
To understand:
 Basics of process
• Concept of quality
- (2) Definitions
- (3) Types
- Quality enviroment
• Relationship between quality and cost
• Relationship between quality and productivity
• Benefits of improving quality
 Definition of quality

• Goal post view (past)

• Continual improvement view
(modern)
 Definition of quality
Goal post view Loss ($)
• Conformance to valid
customer requirements,
i.e., as long as an output No Good No
fell within acceptable good No loss good
limits, called Loss Loss
specification limits,
around a desired value, Nominal
called the nominal value,
Tolerance
or target value, it was Lower Higher
deemed conforming, Specification Specification
Limit Limit
good, or acceptable.

• Once the specification limits are reached, the loss suddenly

becomes positive and constant, regardless of the deviation
from the nominal value beyond the specification limits
 Definition of quality
• Goal post view
Example 1 Loss ($)
– The desired diameter of stainless steel
ball bearings is 25 mm (the nominal
value).
– A tolerance of 5 mm above or below 25
mm is acceptable to purchasers.
Loss No loss Loss
– If a ball bearing diameter measures
less than 20 mm or more than 30 mm,
it is deemed not conforming to
specifications, and is scrapped at a
cost of $1.00 per ball bearing. Nominal
25
Tolerance
20 30
• Continuous improvement view
– Quality is a predictable degree of uniformity and dependability, at low cost and suited
to the market.
– Losses begin to accrue as soon as a quality characteristic of a product or service deviates
from the nominal value.
The Taguchi Loss Function: L(y) = k(y-m)2
y the value of the quality characteristic for a particular item.
m the nominal value for the quality characteristic.
k = A/d2 (constant)
A the cost of exceeding specification limits.
d the allowable tolerance from “m”.

•Example 2: return to example 1, calculate the cost of

ball bearing of different diameters using Taguchi loss function
y : diameter of a ball bearing Example 1
m = 25 mm Loss No loss Loss

d = 5 mm
25
A = $1 20 Tolerance 30
Every milimeter higher or lower than 25mm causes a loss:
L(y) = (A/d2)(y-m)2 = ($1.00/52)(y-25)2 .
L(y) = (.04)(y-25)2 (dollars)
Diameter (y) L(y)
18 1.96 2
19 1.44 1.8 Taguchi
20 1 1.6

L(y) (dollars)
21 0.64 1.4 Traditional
22 0.36 1.2
23 0.16 1
24 0.04 0.8
25 0 0.6
26 0.04 0.4
27 0.16 0.2
28 0.36 0
29 0.64 15 20 25 30 35
30 1 Bearing diamter (mm)
31 1.44
32 1.96

--> Under the Taguchi Loss Function the continuous

reduction of unit-to-unit variation around the nominal value
is the most economical course of action
Types of quality

Quality of design

Quality of conformance

Quality of performance
• Quality of design: determine the quality
characteristics of products (or services) from
customer research.

Determine needs via

Communicate
consumer research and
specifications
sales/ service call analysis

S C
U Concept and specifications – U
P Communicate specifications S
P throughout the organization T
L O
I M
E Organization E
R R
S S

• Quality of design develops products from a customer

orientation
• Continuous, never-ending improvement
 Quality of design

Quality of conformance

• Quality of conformance: produce products (or

services) that
- Meet preset standards
- With predictable degree of uniformity and dependability,
at low cost
 Quality of design

Quality of conformance

Quality of performance

• Quality of performance: how is the

product performing in the market place
- Tool: consumer research, sale/service call
analysis
- Next action?
 Quality Enviroment
• The pursuit of quality requires that organizations
globally optimize their system of interdependent
stakeholders.
Stakeholder: a person, group, organization, member or system
who affects or can be affected by an organization's actions

Who are stakeholders of an organization?

 ?

? ?

? ?

? ?

Who are the most critical stakeholders ?

“In management, the first concern of the company
is the happiness of people who are connected
with it. If the people do not feel happy and
cannot be made happy, that company does not
deserve to exist.
Kaoru . . The first order of business
Ishikawa
is to let the employees have adequate income.
Their humanity must be respected, and they
must be given an opportunity to enjoy their
work and lead a happy life.”
 Learning objectives
To understand:
 Basics of process
Concept of quality
• Relationship between quality and cost
• Relationship between quality and productivity
• Benefits of improving quality
 Relationships between quality
and cost
• Features and prices:
- Affect cost to the manufacturer and price to the customers
- Determine market segment

Example: standard mobile phone, feature phone and

smartphone
• Dependability and uniformity:
- Determine market share within a market segment
 Relationships between quality
and cost
• Dependability and uniformity:
- Determine market share within a market segment
- Create an inverse relationship between quality and cost.
• Dependability and uniformity create inverse relationship between quality
and cost
Taguchi loss function:

When the degree of uniformity and dependability of a

product is high, the quality of the product is high, and the
overall cost to both the manufacture and the consumer is
less
 Costs of quality
• Quality control cost: costs necessary for
achieving high quality
- Prevention cost (e.g. product design & development)
- Appraisal cost (e.g. quality inspection)

• Quality failure cost: the cost consequences

of poor quality
- Internal failure cost (e.g. rework, scrap)
- External failure cost (e.g. product return, repair)

Which cost is the most expensive?

 Relationships between quality
and cost
• Balance the cost of having many market segments
with the benefits of high consumer satisfaction
caused by small deviations between an individual
consumer’s needs and the product characteristic
package for his market segment.
• Strive to reduce variation in product characteristics
for all market segments.
• Invest in prevention and appraisal costs in order to
prevent internal and external failure costs
 Learning objectives
To understand:
 Basics of process
Concept of quality
Relationship between quality and cost
• Relationship between quality and productivity
• Benefits of improving quality
 Quality and Productivity
Scenario 1: Universal Company Output
Before demand After demand for
for 10% 10% productivity
productivity increase
increase
Widgets produced 100 104
Widgets defective 20 26
Good widgets 80 78
Defect rate 20% 25%

-->More widgets were produced, but were more defective,

yielding less productivity
--> Stressing productivity often has the opposite effect of
what management desires
 Scenario 2: Dynamic Factory Output after process
improvement
Before demand After demand for
for 10% 10% productivity
productivity increase
increase
Widgets produced 100 100
Widgets defective 20 10
Good widgets 80 90
Defect rate 20% 10%

--> Even the widgets produced remained the same, defects

rate reduced from 20% to 10%, yielding more productivity
--> Management’s ability to improve the process results in a
decrease in defectives, yielding an increase in good units,
quality, and productivity
 Learning objectives
To understand:
 Basics of process
Concept of quality
Relationship between quality and cost
Relationship between quality and productivity
• Benefits of improving quality
 Benefits of improving quality
• Several benefits result from improving a process:
– productivity rises
– quality improves
– cost per good unit is decreased
– price can be cut
– workers’ morale goes up because they are not seen as the
problem.
• less employee absteneeism
• less burnout
• more interest in the job
• increased motivation to improve work.

• This is called the chain reaction of quality

 Review
• What is a process?
• What are the possible variations in a process?
• What are the differences in the quality defined
by the goal post view and by the continous
improvement view?
• What are the three types of quality?
• How to maintain high quality at low cost?
• How to improve productivity?
• What are the benefits of improving quality?
Difference between manufacturing
and service organization

Manufacturing Service
•Conformance to •Tangible factors
specifications •Consistency
•Performance •Responsiveness to
•Reliability customer needs
•Features •Courtesy/friendliness
•Durability •Timeliness/promptness
•Serviceability •Atmosphere